A few months ago, I wrote about Europe’s plans to start adopting Crowdfunding Regulation. It seems that time has finally come.
These rules will start to apply one year after its publication in the official journal of the EU. The 3 key points they cover are the following:
- A single set of rules will apply to crowdfunding services in the EU, up to EUR 5 000 000
- Strict rules to protect investors from financial losses
- Member states are responsible for authorizing and supervising crowdfunding providers
Information Will be More Clear For Investors
Basically per each project, an investor must have a clear view of the possible risks and charges in investing in it (including insolvency risks and project selection criteria).
Investors will also be provided with a key investment information sheet (KIIS) designed by each project owner for each crowdlending offer or by the platform itself.
Authorization and Supervision
Whenever a Crowdlending platform wants to operate it must request authorization from the National Competent Authority (NCA) or from the member state in which they are based.
Only when accepted, they can extend their services cross-borders.
Even though supervision would also be carried by the NCA, the European Securities and Markets Authority (ESMA) will ease and coordinate partnerships between all member states.
Therefore, all platforms will have more control over them, not only financially, but in terms of projects risks, and clear information to investors.
Read more about it here.